<Editor's Pick>Will "contactless economy" cool down after the pandemic?

Due to the need for prevention and control of the epidemic, direct contact between people was once regarded as a dreadful monster, but the trading needs of the market still exist, so how to complete daily routines for offline businesses such as catering and retail through the "unmanned" method?Therefore, "contactless economy" was born.

Back in 2017, the unmanned convenience stores, unmanned shelves, and other fields were classified under the "contactless economy" and were popular for a while.

In the view of some practitioners, this epidemic may be a turning point: a major public health event for the external market environment and the psychology of end-user consumption is bound to have some impact. But is the impact of the epidemic alone enough to change the fundamentals of the "contactless economy" in the offline commercial market?


Who is active in the "contactless economy"?

Before discussing this issue, I am afraid it is necessary to clarify one concept: under the vague concept of "contactless economy", which is defined in terms of scenarios, what exactly are the fields and products included?

At present, the fields and products recognized as "contactless economy" include unmanned convenience stores, unmanned shelves, contactless food containers, and delivery cabinets, as well as unmanned delivery robots.

After the emergence of the unmanned retail superstore Amazon Go in 2016, several followers quickly emerged in the country. At the same time, unmanned shelves, which are much simpler to implement in terms of technology and can be launched with just a small app, have also taken advantage of this opportunity to spread into a large number of office buildings. The more well-known startups in this wave include Plantain Box, Scarlet Convenience, and Fruit Small Beauty.

There have been media statistics in 2017, 2 years within, at least more than 50 startups flooded into this blue ocean of the unmanned shelves industry. The total financing has been more than 3 billion Yuan, relying on the investment institutions including Matrix Partners China, IDG Ventures, Lanchi venture capital, and other well-known investment institutions, Alibaba, Tencent, and other giants have also successively entered the game.

Those who are in the industry and are still operating unmanned retail, unmanned shelves, and survived, mostly to take a more roundabout solution with the support from industry such as Convenience Bees.


Convenience Bees

At the beginning of Convenience Bees' launch, it is indeed depending on the concept of unmanned convenience stores. But in terms of practical solutions, "unmanned" is only reflected in the final checkout process. The store is still manned; the reform program is not so radical as many other startups.

At the same time, the unmanned shelves launched by Convenience Bees as a whole are built to serve the network of Convenience Bee's retail network, which is not entirely consistent with the underlying logic of a purely unmanned retail shelf venture and cannot be considered a successful unmanned shelf case.

Compared to unmanned shelves, contactless food containers and delivery cabinets show more centralized features: in some way, they are all led by industry giants.


Intelligent delivery cabinet

In terms of courier cabinets, the current head enterprises of intelligent delivery cabinets are Easy Courier, FengNest, Fuyou, China Post Intelligent Cabinet which are all linked with industry giants.

It is not difficult to see, in the business landscape of the industry giants, the intelligent delivery cabinet plays the role of serving main business enterprises. For China Post, SF, and other express industry leaders, this is an opportunity to enhance delivery efficiency and optimize the customer experience. For Fintech companies like Fuyou, it's a chance to reach out to e-commerce consumers.


Intelligent Food Cabinet

For intelligent food cabinet, another path is to provide services to businesses by cooperating with restaurants to solve their problem of busy take-out preparations. Burger King has been trying to use this approach in Shanghai. The restaurant staff will pack the meal into the cabinet, riders enter the order number, or scan the QR code to get food, reducing the cost of communication in the process of taking food, as well as the risk of taking the wrong meal.

The robotics industry is also targeting food business in the "contactless economy" that has been gaining momentum during the epidemic. Robotic food preparation and delivery services which were once regarded as useless have leaped to become an industry necessity during the epidemic. Whether it is in epidemic areas, hospitals, and other special scenarios, or ordinary restaurants to dine-in, robotic food preparation has become a powerful means of avoiding infection and reassuring consumers. Pudu, Langqin, Pangolin, and other manufacturers specializing in catering robots, as well as Cheetahs and other Internet manufacturers specializing in catering scenes, are quite active.


Is "contactless economy" a pseudo-proposition?

The special needs in the epidemic will not last long. In the long run, the market will return to the most essential relationship between user demand and supply-demand.

If we put aside the impact of the epidemic, we will find that the original core solution to the problems in these areas, which have emerged because of the concept of "contactless economy", will be to create a new market. It is all a question of manpower and efficiency:

• Unmanned shelves and unmanned convenience stores are all reducing the number of business personnel in the store, and using unattended business methods to lengthen the hours of operation;

• Unmanned courier cabinet and pick-up cabinet is to improve the service efficiency of express logistics and reduce the labor and time costs caused by user time and cooperation in the process of dispatching, thereby improving human efficiency;

• The reason why unmanned delivery was previously regarded as the useless thing is that although it can replace manpower needs in side dishes, it is not enough to reduce manpower expenditures for restaurants because it has a single function point and is not sufficiently intelligent. The additional cost is therefore not acceptable.


The problems behind it

Behind this is the pain caused by the rising labor cost to labor-intensive industries in China: due to the decline of the working-age population and the improvement in the education level of the population, the labor cost in China is gradually rising. But it is indeed bringing huge entrepreneurial opportunities in terms of labor and human efficiency.

Besides these unmanned and automated solutions, the informatization and digitization of the industrial Internet are facing the core problem, that is, how to reduce costs and increase efficiency in labor-intensive industries under the background of rising labor costs.

Also, in some special fields, after the degree of automation is improved, it may not come down. For example, during the epidemic, robots can do some basic diagnosis and treatment in hospitals, such as the intelligent epidemic prevention and control robot donated by Cheetah Mobile. The robot, depending on the needs initiated by the medical staff, will be able to arrive at a specific location or bed to complete basic consultation tasks, such as taking body temperature, checking the condition of the tongue, and so on.

Although what robots can do is still very limited, the market value created by the introduction of automation is more significant in the current situation of strained medical resources. And the "contactless economy" is therefore more likely to continue to develop.

And back to the overall market picture, the short term labor shortage in the domestic market is not likely to intensify quickly in China, especially for the basic work that can be replaced by "unmanned" products. And the economics of existing labor-intensive solutions are likely to be much higher than those of automation. After all, the future of offline unmanned business has not arrived so quickly.

However, it is worth mentioning that the epidemic still sounded the alarm for the entire society. In the future, public health concerns may continue to increase the necessity of "unmanned", and then accelerate the change of this industry from a policy perspective.


This is an article from WeChat official accounts Deep Echo(ID: deep-echo), written by Ma Xiaojun, translated by Linda Yang and Chris Yuan.